Ghost kitchens are on the rise. What’s behind the trend? In this chapter of The Beginner’s Guide to Ghost Kitchens, we consider the key factors.
A Rising Demand for Digital Dining
Recent years have seen online ordering technology revolutionize how restaurants approach food service. More than 60% of the American adult population now orders takeout at least once a week. Many restaurants are capitalizing on rising interest in at-home dining by offering online ordering and delivery. About 75% of restaurant operators consider takeout to be their best growth opportunity.
The explosive demand for online delivery orders has resulted in the sudden growth of the ghost kitchen model. In 2018, consumers spent approximately $10.2 billion on delivery services, a 42% increase from the previous year. This upward trajectory continued into 2019 and especially 2020, when Covid-19 rapidly changed the dining landscape.
When there is demand, there is innovation. One of the most interesting solutions to arise from the changing restaurant scene has been the advent of ghost kitchens.
Within a short period, multiple players entered the ghost kitchen space. US Foods launched a service to provide guidance and resources to restaurants wishing to open their own kitchens. IKcon, a Dubai-based brand that stands for Innovative Kitchen Concepts, raised $5 million to expand its kitchen network. In August 2020, Fat Brands announced that the Johnny Rockets brand would expand via ghost kitchens.
As more players enter the market, ghost kitchens are becoming a true phenomenon. They seem to be on a trajectory toward becoming the future of the restaurant industry.
Several factors have contributed to the rise of ghost kitchens. As noted, the concept started as a response to the increasing demand for online food ordering. When the coronavirus pandemic hit, the model took off as a way to safely connect restaurants and customers. Dine-in restrictions during COVID-19, shelter-in-place orders, and a hesitation to eat out led to greater customer interest in online orders.
The growth of delivery apps has also contributed to the rise of ghost kitchens. Third-party delivery services make up a huge portion of the restaurant industry. As of 2019, the online food delivery market in the US stood at $19.47 billion; third-party delivery apps accounted for $6 billion. With this market expected to expand to more than $24.46 billion by 2023, delivery apps will undoubtedly continue to be a major player in the food industry.
Restaurateurs are becoming more tech savvy as they adapt to the changing landscape. Food establishments of all sizes and service types are joining the delivery sphere.
Another key reason for the rise of ghost kitchens is their cost effectiveness. Monthly rent can be a huge cost burden on restaurant owners. In our digital, virtual world, enterprising restaurant owners have realized that it doesn’t have to be such a burden.
Because of its advantages for both consumer and merchant, the virtual kitchen model is expected to continue to grow. In fact, the ghost kitchen market size is expected to expand tenfold, reaching $1 trillion globally by 2030. If ghost kitchens are a trend, they’re one that is sticking around.